Add food habits to list of societal and economic changes wrought by coronavirus lockdowns.
Packaged grocery brands that had run up against Americans’ growing preference for fresh and private-label foods are seeing a resurgence as iconic brands like Goldfish, Oreos, Campbell’s Soup and Doritos fill the pantries of homebound consumers in search of small pleasures.
Major processed food companies such as General Mills, ConAgra, Kellogg and Campbell’s are among the suppliers whose snacks, canned goods and frozen food have taken off, often sending their stock prices along for the ride.
“We are seeing significant market share gains for the most dominant brands,” said analyst Chris Growe at Stifel. “The consumers have come back to those brands.”
After the global outbreak began shutting down business and social activity earlier in the year, consumers famously began stocking up on hand sanitizer, household cleaners and toilet paper in anticipation of long stretches of home confinement. While they were at it, though, they snapped up soda, chips, cookies and other snacks that would make it bearable.
“You had pantry-loading by half of the people preparing for Armageddon,” Growe said. “The other half decided, ‘I am going to eat at home now for almost every meal.’ ”
American consumers had been steadily migrating toward private label brands – from ice cream to salad dressing to cheese and dairy – that were made locally in small batches, and promoted freshness and natural ingredients. That cut into sales for the processed and preservative-laden offerings made by the giant food brands typically found in grocery stores’ less-visited “center aisles.”
With the lockdowns sharply curtailing dining out options, many consumers shifted to making most or all of their meals at home. According to the research firm NPD Group, U.S. consumers adopted a do-it-yourself mindset as the pandemic took hold in late March, driving kitchen gadget sales. Nearly 80% of the kitchen electric categories it tracks showed year-over-year growth, NPD said, and more than two-thirds grew by double-digits for things like hot plates, waffle irons and sandwich makers.
“There is a lot of out-of-home consumption that has now shifted to in-home,” said Dirk Van de Put, chairman of Mondelez International, in a recent earnings call. “And in-home, there is more grazing, more continuous eating, and snacking takes up a much bigger role,” particularly with cookies.
De Put, whose company makes Oreos, Triscuits, Ritz and Chips Ahoy, said snacking fosters a sense of family. “Sharing a snack with your kids, as everybody is sort of cooped up in the house, brings back a feeling of normalcy, of togetherness, calming everybody down,” he said, according to a transcript of the call.
“Those snacking brands have grown significantly,” Growe said. “We call those expandable consumable goods. That means if they are in your pantry, you will eat those more quickly.” PepsiCo recently reported first-quarter earnings that rose 10%, thanks to people loading up on soda and snacks like its popular Doritos.
Mark Petruniak, 32, of Washington, said he is binging on Netflix, fried banana chips and Diet Coke because he is unable to visit his usual restaurants.
“I’ve been getting the frozen dumplings from Trader Joe’s, and eating veggie chips,” said Petruniak, who works in information technology. “Snacking has replaced cooking. I am around all day now. I start a Netflix series and just snack, snack, and snack.”
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